The price of Bitcoin plunged from $10,160 to $9,012 on BitMEX within less than 28 hours, dropping by 11.3%. It coincided with a staggering 5.6% drop of the Dow Jones Industrial Average (DJIA).

Three key factors contributed to the sudden downtrend of Bitcoin: liquidation of $78 million worth of longs, correlation with the stock market since March 2020, and the strength of the $10,500 multi-year resistance zone.

On March 13, the price of Bitcoin plummeted to as low as $3,600 on BitMEX.

The move liquidated over a billion dollars in futures positions. The downtrend was so strong that BTC technically could have hit zero.

Sam Bankman-Fried, the CEO of major cryptocurrency derivatives exchange FTX, said after BTC dropped below $4,000:

“R was huge today. There were endless liquidations, and the BitMEX orderbook was basically nonexistent… It means BTC might go to 0. But it didn’t.”

Since then, data from Skew shows Bitcoin has been correlated to some extent with the U.S. stock market.

On June 11, right before the price of Bitcoin dropped to as low as $9,012, pre-market data of the Dow Jones indicated a 900-point drop.

Before the U.S. stock market opened, the Dow dropped by around 3% during an after hours trading session.

As equities dropped, the price of Bitcoin followed. The stock market correction did not necessarily cause BTC to decline. Rather, uncertainty across all asset classes likely fueled a short-term drop for BTC.

Other assets and stores of value also dropped off simultaneously. Gold fell by 1% in two hours, despite its newfound momentum since early June.

The initial slump in the price of Bitcoin led an immense amount of long contracts in the futures market to get liquidated.

In the Bitcoin futures market, traders use leverage in between 1x to 125x to trade BTC with added risk. Higher leverage leaves BTC vulnerable to a steep pullback in a short period of time.

On BitMEX alone, in a single hour, about $50 million worth of futures contracts were liquidated.

The futures market likely affected the price of Bitcoin more heavily in the recent fall because the volume of the spot market has been on a decline since early May.

The drop also happened at a pivotal point for the price of Bitcoin in a technical sense.

Historically, the $10,000 to $10,500 range has served as an important multi-year resistance range.

In October 2019 and February 2020, the price of BTC fell by 39% and 65% following the rejection of $10,500.

A confluence of Bitcoin approaching a critical area of liquidity, an abrupt plunge of the U.S. stock market, and the liquidation of tens of millions of dollars worth of longs caused a rapid sell-off.

In the short to medium-term, the biggest source of selling pressure for Bitcoin is miners.

For now, data from ByteTree suggests miners are not selling more than they mine on a daily basis which is around 900 BTC per day.

Whether miners begin to sell more BTC than their daily revenues to cover operational costs and the sell-off in the futures market continue will decide the short-term price trend of Bitcoin.

Report from : Joseph Young

“I’m a financial analyst and investor who has worked in the cryptocurrency and technology sector since 2013. I’ve worked with leading publications within the cryptocurrency space, providing unique insights, interviews, market analysis, and technology coverage. I’ve contributed to Cointelegraph, CryptoSlate, CCN, Hacked, Binary District, NewsBTC, CoinJournal and CryptoInsider”

Cryptocurrency trading in Malaysia has surged as the country endures an extended lockdown, costing its economy an estimated $550 million a day. Regulated cryptocurrency exchanges are reporting substantial growth in trading volumes and new users as people seek “a good store of value in difficult economic times.”

Increased Crypto Trading Volumes and New Users

Interest in cryptocurrency has grown significantly in Malaysia amid the extended lockdown restricting travel and nonessential businesses. The country estimates that 2.4 billion ringgit ($553 million) are lost each day that businesses remain shut due to the coronavirus pandemic.

Despite the worldwide economic crisis, cryptocurrency trading in Malaysia has shown strong growth, according to two government-approved crypto exchanges. Luno, Malaysia’s first fully approved digital asset exchange, told The Malaysian Reserve publication that local trading volumes on its platform grew 33% over the past four weeks. Luno Malaysia manager Aaron Tang said the number of active users on his exchange hit a record high during that period. “There are a plethora of digital coin investors in Malaysia,” Tang told the news outlet, elaborating:

We believe the surge is partly driven by the belief that cryptocurrencies (particularly bitcoin) are a good store of value in difficult economic times.

“We believe the surge is partly driven by the

belief that cryptocurrencies (particularly bitcoin)

are a good store of value in difficult economic times.”

The two approved cryptocurrency exchanges in Malaysia have experienced increased trading volumes and signups, Luno Malaysia noted.

The Luno manager explained that some investors are using cryptocurrencies, such as bitcoin, to diversify their portfolios, because they are worried that huge stimulus packages and the global economic crisis could lead to inflation.

The second fully approved cryptocurrency exchange operator, Tokenize Technology, has also experienced an increase in user signups. CEO Hong Qi Yu told the news outlet that his platform is seeing an average daily trading volume increase of 30% to 40%.

“We are quite fresh but see that Malaysians are quite eager to sign up,” he was quoted as saying. However, he added that most people are still taking a wait-and-see approach when it comes to cryptocurrency investing, estimating that only 2% of Malaysia’s population of over 30 million has adequate cryptocurrency knowledge.

Malaysian Cryptocurrency Regulation

Malaysia’s securities commission (SC), Suruhanjaya Sekuriti Malaysia, started regulating the country’s cryptocurrency industry on Jan. 15 last year, when “the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019” went into effect.

The Commission approved three cryptocurrency exchanges conditionally last year: Luno Malaysia, Sinergy Technologies, and Tokenize Technology. Luno soon met the regulator’s requirements and became the first exchange to receive full approval. Earlier this month, Tokenize Technology also met the requirements.

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If you want to buy Bitcoin without actually buying Bitcoin, you now have another way to own the controversial digital currency.

On Wednesday (15 August 2018), an “F share” (ticker: CXBTF) became available for “Bitcoin Tracker One”, an exchange-traded note (ETN) that tracks Bitcoin (BTC/USD), and is issued by Swedish company “XBT Provider”, a wholly-owned subsidiary of UK company Global Advisors (Holdings) Limited.

This Bitcoin ETN trades on Nasdaq Stockholm (Stockholm Stock Exchange). Although this is a non-U.S. security, being available as a F share (quoted in USD) makes it more accessible to U.S. brokerage/retirement accounts.

According to Bloomberg, which announced this news, Ryan Radloff, the CEO of CoinShares (Holdings) Limited, the company that holds all the shares in the capital of XBT Provider (the issuer of “Bitcoin Tracker One”), explained why this news was significant:

“Everyone that’s investing in dollars can now get exposure to these products, whereas before, they were only available in euros or Swedish krona. Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.”

Although some people may see this product as being very similar to Grayscale Bitcoin Investment Trust(ticker: GBTC), which also offers exposure to Bitcoin, the latter has lower liquidity and is more expensive (according to Seeking Alpha, a single share of GBTC trades roughly 50% over the price we would expect from the underlying asset).

Radloff agrees: “I do see this as a competitive product. Our products historically have not traded at a premium and are liquid.”

Thomas Lee, Fundstrat Global Advisor’s Head of Research, took to Twitter to explain why he was excited by this news:

According to this ETN’s Fact Sheet, it first started trading on the Nasdaq Stockholm exchange 18 May 2015. Much more detailed information about the product is available via the 2018 Prospectus.

If you look up CXBTF via a U.S. brokerage account or a market data provider such as ADVFN, you will see a quote that looks something like this:

On 17 January 2018, a CNBC article titled “What the US can learn from Sweden about how to launch a bitcoin fund” explained what was special about this ETN:

“An ETN is an unsecured debt instrument that promises to pay the pattern of returns of the bitcoin price. Ironically, despite being an unsecure instrument, the XBT product tracks the spot price of bitcoin by holding the actual currency and forward contracts in case of a liquidity shortfall.”

At that time, Laurent Kssis, who serves as CEO and Head of Product Development for the ETN business at XBT Provider AB, told CNBC:

“At that point in time [18 May 2015], the ETN structure was the best route to bring the products to market. As a result of using this structure to bring the product to market, investors have been able to gain exposure to the price movement of bitcoin since 2015. This stands opposed to the U.S., where most investors are still waiting for access to bitcoin exposure via their normal brokerage account.”

Matt Hougan, the Global Head of Research at Bitwise Asset Management, who used to be the CEO of Inside ETFs, also spoke to CNBC back in January 2018:

“The [XBT] products are very well designed for what they do. They deliver, unlike GBTC. They give exposure to the returns of bitcoin and ether pretty well. I think they were well executed and they’ve done their job.”